AT&T waits for its shot at FTS

AT&T waits for its shot at FTS 2001

GSA is trying to balance revenue guarantees against need for competition

By William Jackson

GCN Staff

DALLAS'AT&T Corp., which once held about 80 percent of the government's long-haul telecommunications business, wants to compete for it again under Metropolitan Area Acquisition local-service contracts but feels shut out by the General Services Administration.

'We have asked GSA [last December] to amend the MAA to let us bundle services end to end,' said John J. Doherty, vice president of AT&T government markets. 'We're prepared to offer services now.'

GSA's Federal Technology Service also wants to bundle end-to-end services via combined MAA and FTS 2001 contracts. But Doherty said FTS is dragging its feet because AT&T's competition could jeopardize the $1.5 billion in minimum revenue FTS has guaranteed to split between the FTS 2001 long-distance contractors, Sprint Corp. and MCI WorldCom Inc.

'The biggest hurdle they're putting in front of us' is the minimum revenue guarantees, Doherty said at GSA's Networking Services Conference this month.

Despite falling telecom rates, he argued, the huge volume of services used by the government makes the guarantees a nonissue.

Rep. Dan Burton (R-Ind.), chairman of the House Government Reform Committee, requested a General Accounting Office review of the FTS 2001 contracts and their revenue guarantees. GAO was scheduled to release its findings last Friday.

Serious business

FTS commissioner Sandra Bates, who has final say on whether AT&T or any other MAA contractor can participate in FTS 2001, said the guarantees are a real issue in spite of rising demands for services.

'The minimum revenue guarantees are significant, and with the declining prices they are becoming more critical,' she said.

The decision about allowing end-to-end service will depend on what Bates finds 'is in the government's best interest,' she said, and the guarantees will not be the determining factor.''There may very well be a new player. Our intent is to include everyone.'

But Doherty said the decision could drag on so long that AT&T's current customers will be forced to move to other providers under FTS 2001 before its own FTS 2000 transition contracts run out Dec. 6.

The massive transition of 282,000 circuits for 170 agencies in 7,000 cities was the focus of the Networking Services Conference. Although FTS 2001 is not mandatory, Bates' organization, which receives a fee for managing the contracts, wants agencies to use FTS 2001 for their telecom and networking needs.

About one-third of agencies have already moved to the new contracts, and Bates has set a goal of Sept. 30 for finishing the transition.

AT&T, along with Sprint, was a contractor under the old FTS 2000 program, a mandatory long-distance vehicle for civilian agencies. AT&T lost out on FTS 2001 to Sprint and MCI WorldCom. It made a comeback last year when it was awarded local-service MAA contracts in New York, Chicago and San Francisco, and it has since won MAA contracts in Buffalo, N.Y., and Cleveland.

The MAA and FTS 2001 contracts let vendors cross-compete after a one-year forbearance period, which expired in December. That was when AT&T asked to modify its contract for re-entry into the long-distance program.

Doherty said that when AT&T failed to win an FTS 2001 contract, GSA officials told him the company should get into the MAA program if it wanted to continue in the long-distance market. He said the company assured its federal users that it entered the MAA program with the intention of continuing to provide them with long-distance service.

AT&T officials have had several meetings with FTS officials about the modification request, Doherty said, and he expects to receive the contract requirements for modifications by the end of the month.

A long shot

Despite Bates' assurances that she favors inclusion, Robert Bubniak, associate deputy assistant secretary for telecom at the Veterans Affairs Department and head of the Interagency Management Council, said he doubts that AT&T will be allowed into FTS 2001. Adding a third contractor while the transition is under way would be too complicated, he said.

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